tv Squawk Box CNBC January 25, 2010 6:00am-9:00am EST
good morning. a fed fight brewing. both sides now predicting that ben bernanke will be victorious. the markets at this hour, u.s. equity futures pointing to a positive start after three horrific days and the bulls look to bounce back from those losses last week. and the super bol bowl is set, the colts versus the stants, as "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. carl is off today. our top story, ben bernanke. white house officials and senate leaders are now confirming that he will be koven firmed for a second term. top senate republican mitch mcconnell on "meet the press"
yesterday. >> will you vote for him? >> i'll let you know. >> do you have concerns about his renomination? >> i think he's going to be confirmed. >> do you have concerns about his renomination? >> some of my members do, but i think he's going to be confirmed. >> chairman bernanke's first term expiring on the 31st. but again, a vote is expected to be confirmed. >> i'll let you know what i vote, right? you don't need to -- you, right up to when you vote, it's a -- senators are -- >> well, why would you say earlier? >> you can ask me 00 times and i'm going to keep saying -- but we're at 17 nos, right? >> 17 nos and 31 yeses. larry kudlow has been on a terror on this because he says he's going to receive more no votes than probably any fed chairman in history. he worries at some point that
will make a weaker fed chairman. but i don't know, i think once you're in, you're in, right? >> yeah. and i guess there's central bankers all over the world. did you read this down in argentina? >> oh, yeah. that's been going for weeks. >> they're going to lock him out. the fed chairman been they're put a bar across the story. he's still going to work, but they're saying no, you can't -- >> well, the president there basically said i don't want your services any more. i'll accept your resignation. and he said, wait a second, i didn't resign. >> and chavez is ordering the tv stations to shut down. they're thinking about that here, the obama administration, but just fox. >> no. you're going to get us in trouble. >> it will be msnbc everywhere. it will be like the telethon. the fdic is reportedly working on plans to package
billions of dollars of assets from failed banks into securities. the agency has more than $36 billion of assets on its books. the ft says the plan is aimed at starting the sluggish backed securities area which is still not doing anything, really. corporate leaders, investors and government leaders from around the globe are heading to davos and, you know, journalists that are worth their weight in gold are headed there, as well. are you out -- >> i'm leaving later tonight, yes. >> it's tworld economic forum. >> right. >> a lot of people there are not going to have the same profile, maybe, that they've kept in recent years. >> no, no. and interestingly enough, a lot of bankers who were supposed to
go last year didn't go. we'll see if they go this year. >> will you do me a favor? will you move that curtain and look back into coach and see whether you see any bankers flying in the back of the plane? >> last year, i think i saw george soros on the plane. i was in business class and he was in first class. >> there's a difference. >> yeah, there is. >> senior bankers will use the meeting to lobby against president obama's proposals to cap the size and trading activities of banks. and "squawk box," as we've been talking about, will be reporting live. that's her. she's headed -- you're in, like, seat 1a this time, right? >> no, no. >> 1b? >> no. you better be. it's a long flight. >> it is a long flight. >> get up and walk around a little bit. >> maria and her team, they left
on friday. ross is in the air right now and he's on his way. >> he's in the air right now? >> yep. that's what they told me. interesting. >> also, alistair darling told us proposed reforms would not have stopped the crisis. he suggested price limits and forced split. he used lehman brothers as an example. he counters that the point is not creating separate institutions, but watching the connectivity between firms in relationxd to their financial transactions. but the financial stability board, it is welcoming those u.s. proposals to limit bank size and trading activities. this is the group that was charged by the g-20 to coordinate regulation and response to the financial crisis. the fic is considering other options to address this too big to fail problem including capital leverage, and liquidity requirements. they're talking about simplification of firm
structures. the group will be making its recommendations to g-20 leaders coming up in october. >> u.s. regulators closing five more failed banks. they were located in florida, where they usually are, new jersey, missouri, and a new survey says businesses expect to boost hiring and capital spending in the first half of the year. the industry pole was conducted by the national association for business economics and all those surveyed suggested they are making business decisions with an eye towards positive economic growth this year in 2010. >> let's get a check on the markets this morning. this morning, the futures are above fair value. it's a big sigh of relief for anybody who has been long these markets because the last week was a doozy. you're talking about the dow down 4.9%. the s&p was down 3.9%. the indices had their worst or three-day deline back to march of last year. right now, though, you can see that those dow futures are up by
triple digits at this point. you're talking about close to 120 points higher, just over 120 points higher for the dow. the s&p futures, those are looking like they're off to a tear, as well. you're talking about up by 13 points there. you've got a lot going on this week. earnings will continue and the focus will continue out of washington, as well. you've got bernanke confirmation hearings expected. state of the union comes up tonight. right now, krooul crude oil up by 70.82. this is a survey among analysts. they are looking for the average oil price for 2010 to be 77.50 a barrel. this morning, yields are a little higher, 3.632%. and the dollar was up for the week last week, at least when you were looking against the euro. it was up by 1.7%. right now, it's down across the board. you're talking about the euro
right now at 1.4189 and the yen at 90.24. gold prices, let's get a check on that, as well. gold saw pressure last week as we worried about some of those, the legislation coming out of washington. commodities across the board this morning, gold prices are backçó up by $14 to $1,103.70 a ounce. let's go to the overseas market right now. christine tan is in singapore. we're going to start things off in london with carolina. >> hi, becky. good morning. european shares were trading lower earlier today. but now we are seeing a partial recovery in banks in mining, which is leading the ftse and all the european markets flat at the moment. investors reassessed the implications of proposed banks from the white house. lloyd's banking group, royal bank of scott license and went
from 3% to 3.5% so far in london. xstrata managed to regain ground after a sharp retreat last week. on the technology side, ericsson lost 3% after fourth quarter sales came in below forecasts. phillips electronics, though, advanced more than 3% after reporting a bigger than expected operating profit. no domestic economic data here in london due to be released on monday, so investors' main focus is at the moment on tuesday final flim preliminary reading for fourth quarter uk gdp which is expected to be revised up to show the ending of the worst. let's take a look on the asian markets now with christine in singapore. >> thanks for that, carolina. asian markets felt monday given sharp lowses on investments by friday. a lot of focus still on obama's
bank proposals. tech stocks, however, did come under pressure after disappointing results from google. investors piling into the japanese currency as a safe haven, we have the japanese yen today striking a five-week high against the dollar and that saw the nikkei in tokyo slip 0.6%, a four-week closing low. the stronger yen reallyñi hurti exporters like toyota. individual earnings, lion like cannon, also in focus. in hong kong and china, we have concerns about bank of china's fund-raising and that weighed on the banking sector. china's tightened monetary policy and the bankers weighing on sentiment in hong kong. now, in shanghai, the index fell 1.1%, a one-month closing low. future fund raig raising moves putting on the banking sector in china. >> christine, thank you very much. right now, it's time for our monday morning strategy session. you see that, joe? you can say it, strategy session. >> very good. someone else has a task force i
read about today. there's another task force. i think it might have been on one of the blogs. so it is used -- >> you are. >> no, i'm knotting using it. but anyway -- >> anyway, michelle gerard is joining us today. also, william burns, director of trading at coniper trading securities. william, we're watching these futures this morning. you're talking about serious upward movement here. >> yes. >> is this just a bounceback after the serious sell-off from last week? >> i think it is. the bonds that we've seen across the board have been pretty consistent. obviously, friday, we had very heavy volatility in activity. i think the sell-off was orderly and not panicked. >> but it was steep. >> it was definitely steep. but i think are poised for a nice bounce this mortgage. >> when you saw some of the selling last week, was there ever a point where you thought, oh, boy, here we go again? >> definitely. you know, you do have people saying, you know, are people going to come in and support this?
you know, the dips that we've seen in july, maybe october, november, consistently people have come in and supported. investors have come in. that will be the telltale sign and earnings. >> and earnings for the most part last week were pretty good. you didn't see much of a bang from any of it in the markets. >> no, exactly. and you have bernanke and others. >> and i think this is behind a lot of the market movement. the noise coming out of washington, the, you know, latching on to the, you know, beating up on wall street, which is obviously very politically popular, but i still think that investors look at the policies that are coming out of the add mip administration, going after the financial institutions, you know, ultimately, that's -- it's
sort of negative, certainly for the economy it's not going to necessarily get loans being made. and i think the uncertainty surrounding the fed chairman. where the fed comes under so much political pressure that it begins to impact the monetary policy. the fed can't do what they need to do. the developments surrounding his confirmation, those are going away this morning. that may be why the futures are doing better. >> do you think even if bernanke is confirmed, there will be political pressure to not raise rates as quickly as he may like to? >> i'm sure that he's going to feel the heat, certainly from congress. he's trying at this point, his financial regulation is being considered and the fed's powers are being called into question. he's trying to keep the fed -- maintain the fed's independence and the strength of the institution and he's going to be under a lot of pressure. at some point, we think probably earlier than others think, that
fed is going to have the reverse course. >> it's kind of sad that we're worried that koveng, if it gets too political, that they would make the fed keep rates too low for too long? gosh, that would never happen. what happened that put us in this mess in the first place inspect they were independent then and they had no idea what they're doing. we're talking about the unemployment rate will probably be above 10%. for congress, that's going be very difficult for them to understand. i think that they're going to continue to be under pressure. are they going to continue to put pressure under the fed chairman to explain what they're doing and why. >> we're down for the year now,
right? >> yes. >> if you don't make up the ground this week -- what's more important, the first week of january? >> the first week is supposed to indicate how the month goes. so do you expect the market to be up? it's ridiculous to ask for a prediction, but it need to come back this week. >> it definitely does. and i think people will be trying to digest the numbers. >> doogel, that hurt last week. >> definitely did. >> ge managed to close higher on friday. but goldman -- >> goldman came out and it was the second day that they changed these attackes from washington. >> that's where with they say, the political agenda, there's all kinds of commentary on that. >> 5% in three days. we thought maybe it would take a
lot longer than three days. . does it do 10 finally? >> i don't know. the run that we saw was pretty strong. but i think people see this pullback as a strong pullback. >> and we're probably 1100, which people said was below the support on the s&p. >> you see michelle talking about what's happening with bernanke. from the market's perspective, you said already it would be bad news if he was not reconfirmed. >> yes. >> what if he is re-kuhn firmed and there is an idea that he is weaker politically and he can't raise rates as soon. is that party day for the markets? >> i think the rates -- everyone knows how rates have to come up, you know, have to come up from here. i think that is a high-end problem. >> are you the in the camp that thinks it may be longer off than
michelle is talking about? and i just wonder what the market's reaction would be to some of that. >> i think they probably will be a little longer term. michelle, you're thinking what? >> we think june, which is much earlier. i think the consensus is probably sometime in the third quarter. >> yeah. >> so we're even sooner. we're not as confident that the inflation will stay along line. >> i would think more along the third quarter, as well. >> if it comes in june, will there be a sharp reaction to that, as well? >> definitely. definitely opinion. >> so there's a lot of things that could knock them off their feet. if they feel like, gosh, the fed probably should be raising interest rates because the data are getting stronger, but at the same time, you know, they're worried that they're not going
to, then you maybe have a situation where the bond markets are starting to react negatively. so it's going to be, i think, a difficult year here, you know, obviously for the fed and it's going to come down to how the economic data looks. >> what happened at the fed meeting this week? they've got a two-day meeting, but it's in the mist of -- >> i don't think much of anything, but i think me think inflation will not be a problem. i think when it comes to prepping the markets from reversing courts, that isn't something they feel they will have to democratic today. but i don't think we're going to see anything this weeks in terms of setting the stage for future rate hikes. >> when we return, the ceo of ericsson will talk all kinds of
things. lower sales than expected in all of the areas of this company's business put europe in the red initially. anyway, we'll talk smart phone wars, his outlook for the market and as we head to praek, here is a look at last week's winners & losers. thing as taking a chance? as having to decide to go for it? at the hartford, we help businesses of all kinds... feel confident doing what they do best. by protecting your business, your property, your people. you've counted on us for 200 years. let's embrace tomorrow. and with the hartford behind you, achieve what's ahead of you. ♪
welcome back, everybody. right now it's time for your national travel forecast. we're going to check in with scott williams from the weather channel. >> external not a great start here as we move into the northeast. you want to just climb back in bed and expect numerous delays as we move into some of the major cities here as the morning progresses. we'll continue to find the heavy rainfall moving into new york city. temperatures right now, comfortable, though, in the 50s. 356 in philadelphia. look at all of this rainfall lifting to the north and east. 1 to 3 inches expected. zooming in closer here around the delmarva peninsula. philadelphia, all this moving into new york city. so newark, laguardia, call ahead. check with your carrier these morning as we opinion to find the heavy rainfall movl moving into the area.
we're tracking some weather in the east. still the sliver of a tornado watch box. that sxierts at 7:00 a.m. orlando, tampa, seeing the activity continuing to move towards the south and the east. eventually, this line making it into miami. miami has a tornado warning in effect until 10:30 this morning. let's expand the view across the nation. snow showers and wind will cause problems around minneapolis, chicago, and no rest for the weary here as we move along the west coast, another system bringing rain and wind back into the area, likely to cause some delays. so looking at the delays adding up here, you're heavy into new york city, san francisco also into the boston area. watching for those delays. call ahead and certainly pack some patience. back to you. >> okay, scott, thanks. we had ericsson out with fourth quarter results earlier this morning. and some disappointment on the sales and we're going to get something straight from the ceos
out there. helen vestburg is the president's ceo. welcome. give us an idea of where the disappointment in the operators that are in their orders. it was across the board, across all your segments and across tall different markets inspect. >> non. as we saw 2009 already in the beginning, we thought that it was unreasonable that a tell me communication company would not be impacted by this gradual crisis. it has not different between different markets. china, the u.s. and a couple other markets have continued to invest during the year. and our professional services sector, as well. but year over year, we had flat sales. at the end of the year, we have
a little bit of impact from that financial crisis. >> yeah. most analysts say that ericsson is well positioned for the rebound. but it was a slower uptick in emerging markets that you sell into? is that the way we should view it? >> yeah, i think so. that comes back quite a lot on the decision n of investment in 2009. there were a lot of uncertainties in the markets. so i think what we're seeing in the second half of 2009 is the credit constraints. but there was volatility and currencies in some emerging markets. >> has the competition from your chinese rival, huei technologies, have they gotten better or are they more aggressive in pricing or -- a year ago, was this one of your primary concerns and is that a
concern now? >> i think that this industry is very interesting and, of course, the prospect of the telecom industry going forward is even more interesting as we're going to see a lot of connections in the networks on more mobility. and, of course, that attracts a lot of competition. i think we will leave the competition for a long time and we have a different type of vendors. now some vendors are in competition. i think what we will see is that folks are laying in the forefront for technology number one in that and in services and a combination of the figure for distribution all around the world, we have very strong assets. >> it's just tough when all of a sudden the condition that holds its currency so low becomes competitive in these high tech arenas. that can make it hard on a lot of different companies. >> i think that they -- i respect all the competition and now we have in the segment of infrastructure, we have mediation. but we have also others. in the service sector, we have
other private competitors and so we have quite a broad availables of forum these days with where we have different competitors, of course. >> how is this going to work out? everything is too small. my phone does enough already. but you're constantly trying to do more things, i guess. >> i think sony ericsson has a great brand and great products. especially pass volumes came down. and in the fourth quarter, we're down controlly in volumes. still, they narrowed down the losses compared to last year in q4. so they're on the right track with cost efficiency. and we increased our asp, average sales price per unit in the quarter, as well. so they're going to right direction. >> we appreciate your time this
morning, mr. westberg. good luck in the future and hope to see you again in the market kwarer. >> thank you very much. coming up, john hardwood is here and he will be talking to us about all things washington and including ben bernanke's reconfirmation site. plus, much of the spotlight is on apple. the company facing the culmination of months of rumors about its latest creation.
good morning. i'm joe kernen with becky quick. carl is off today. you've lived everywhere, but you were in indianapolis for a while, were you not? >> no. i was in northwest indiana and .we were bears fans there. >> you were bears fans. >> yeah. because we were outside chicago. >> did you watch peyton manning? >> i did. he's the man of steel who can march through the. >> one guy, i guess we knew that, joe montana or something, the way those guys can take a team on their back. >> they played very well. >> peyton man sg like the greatest -- that should be interesting to see against drew brees. that's going to be fun. i was disappointed for el-erian about the jets been but then i came in this morning and i am an emory cat, the company that makes emory cat as even on tv
has sent me -- i don't have a cat, but i am an emory cat. i'm going to use my own nails. >> are you going to get a cat? no. but i might get another dog, though. that would be three. we're going to check in with john harwood. he has the latest quest to be reconfirmed as fed chairman. plus, a big week ahead for apple. quarterly results will take a bite out of the tech giant and analyst expectations, hopefully they won't be rotten to the core. we're going to peel back the earnings. then in the -- and apple per quarter keeps the -- in the next hour, though, mr. shorty, he love is to be called that. jim chanos will join us. who want? but first, a roundup of the morning's headlines. >> sam's club is cutting about 10% of its workforce, that's roughly 11,000 jobs that they'll be jetsonning. they're outsourcing its in-store
product demonstrations and eliminating positions used to recruit new business owners. also, the owner of village are turning the complex over to creditors. they couldn't make a multi million dollar loan payment due earlier this month. a spokesman said the only viable option would be to turn control of the building over to the lenders. and it's official, italy's ferraro ruling out a rivalry bid for cadbury. >> did they drive down and look at that place before they bought it? >> remember, it was the like the largest price paid for a complex at that time. people wondered at the time whether that was the top for real estate price peps. >> let's get to our friend, john
harwood. senate majority leader harry reid hopes to hold a advocate this week. john, there's 17 that say no. was this ever really in question, in your mind? >> well, i always thought that he would be reconfirmed to a second term, but it got pret pretty sizesy there at the end of the week, you have russ feingold and barbara saying they were going to oppose ben bernanke. barbara boxer has a re-election race in california. and then you have the harry reid equivocate. even at that moment, i assumed that he was going to make it. but you have to go out and get those votes and there was a populist wave that was building. i think the white house orchestrated a full-court press over the weekend. warren buffett got involved. we have jeff immelt of our parent company, ge, also got
involved. in the end, i think they're going to end up with about half the republican caucus supporting him. they'll lose some democrats, maybe a dozen or so, but i think they're going to get there in the end. >> here the democrats have a chance to back the administration. now they've got the outliars on this. it makes no sense. >> well, most of them will. the challenge was to make sure that republicans, who agree with ben bernanke, that they were going to fall in line and sort of democrats assumed, given the way washington works, republicans were torturing them a little bit by declining to sort of make clear that their votes were going to be there. and so you had a little bit of a game of chicken going on with members in both parties trying to claim the populist high ground and not rushing to look like they were in the tank for mr. fed, who, you know, as a symbolic matter, is popular on
wall street right now, but not so popular in the rest of the country. >> yeah. what do boxer's polls look like right now? >> like my democrat on the ballot this fall -- >> she's up in november? >> yes. she's up in november. any democrat on the ballot this fall is in difficult shape. one of the things that sort of got lost, and i was talking to a senior white house official over the weekend, he said i wish wall street officials didn't panic so much on friday. boxer came out and had she was against bernanke and we all focus on how bernanke needs 60 votes. even boxer, who said she was going to vote against this confirmation was going be with him on the filibuster votes. so it was less threatening than initially appeared. but a after scott brown in massachusetts, the entire town is completely on edge. >> meanwhile, i wouldn't call it chaos, but i thought summers and geithner were front and center.
suddenly volcker is front and center. you see bringing that guy back. there's a lot of scrambling going on right now. would you characterize it as chaos or looking to regain footh? >> i would say the latter. and i think what happened was both tim geithner and larry summers had a set of ideas that they wanted financial reregulation to move forward with and get past. volcker's ideas were not one of them. the president has a lot of confidence in geithner. as the populist wind started blowing throughout the year and they could see in december that they were going to have a difficult election year with unemployment getting to 10%, likely to stay there, the president tasked larry summers and tim geithner to work with volcker, try to come to some sort of consensus on this.
they did in december and this thing got rolled out. but the fact that it was rolled out 48 hours after scott brown's victory, made it look like a sharp populist you-turn that undercut tim geithner. so what you now saw at the end of the week, he said tim geithner is not going anywhere. we think he helped steer this economy through the greatest since the great depression. >> we'll see you there. is it wednesday? >> wednesday is the state of the union. but can you answer me one question? >> sure. >> talked about scrambling. why didn't brett farve run that ball into field goal range? >> you may be talking about something that occurred after 8:00 p.m. est. i saw the whole game before that. i can't, john -- >> it was a performance by the guy he had been beaten by the new orleans defense. he had hurt his ankle. but boy, there were 15 seconds
left. engd have run it into field goal range and we would be seeing a peyton manning/brett farve super bowl right now. >> he's an inspiration. i could get hit once, john, but all those guys. that would be it. >> we wouldn't be nursing in a tub at home, we would be in traction, ivs. >> is it wednesday night? >> wednesday night, the state of the union address. >> are you expecting any chills down the leg like chris matthews or you don't know? >> i think everybody is feeling the little chills of fear in washington because of what they saw in massachusetts last week. >> all right. thanks, john. we'll be watching. we'll talk to you before then. he's not going to davos, i don't think, is he? >> no. he's staying for the state of the union address. >> carl is going to be down there? >> carl is going to be down there, too. so washington, we'll be a split three-way show.
carl will be here, i'll be in davos. >> are you kidding me? >> no no. >> meanwhile, on wednesday, apple is expected to unveil a touch screen tablet device that would rival amazon's kindle. joining us with a pru view, michael bransky. what does apple have to do tonight to impress the markets? >> we do expect them to beat the street on the quarter, becky, because they did have a very strong quarter. but they will probably guide below the street, which is typical conservativism for them. and while that's çónormal, in ts kind of market, it may not be good enough to really drive the stock very much higher, given the large run it's had. >> yeah. a big run that it's had. but you're somebody who is looking for an even bigger run. you're got an joust perform rating with a price target of $275 a share. how long is that price target rising? >> well, it's a one-year price
target. but it's a big picture. apple has a number of very big drivers ahead of it. iphone is continuing to go.cq golden eggs left with the tablet and we do think, of course, that max will continue to gain share. so it still has all kinds of growth engines driving it. and it's able to sustain margins in this kind of environment. and we think that's the reason why the stock is going to net go higher. but in the near term, there may be a pullback. >> but mike, that's a bold call. you're sticking your neck out there. you're not jumping around on the margins on in this stuff. you're convinced that this company is poised to take off. yeah. well, there are macro factors propelling them. the smart phone market expands dramatically. so apple is riding that and surfing those waves very successfully and we don't expect that to abate this year. >> the tablet that we're
expecting to see on wednesday, what is that going to do t for the company? >> well, apple has a history of creating desire and addressing markets formally unaddressed by incumbents. so our view is that their am bigs are like a kindle like product, but really to create a new portable device that takes advantage of gesture and touch and it's rumored that that will be available for carriers. we think that is where they're trying to grow. if it's successful, it could be another growth engine for the company. it's possible that it will be considered as a niche device like a mac air or kindle device and people may react accordingly in the near term. >> what would it have to do to be bigger and more important than the kindle? >> kindle is a single function device. apple typically goes to larger markets. it will likely be a converge device. probably addressing media, potentially even some basic
computing functions. >> but what does that mean, other media? i could do things like read an e-book on it or maybe get music on it, too? >> well, i tunes. in other words, you should be able to basically view your itunes contents, potentially even from the cloud on the device. but certainly be able to do music and potentially video and other devices. of course, surfing the web is a big area, as well. so, you know, e-book readers use technology that limits them in those areas, whereas this device, which will have a shorter battery life than e-books is likely to be much broader in scope. >> so you're talking about something that is bigger screen than the iphone, can do more than that, but less than like a mac notebook or something could do? >> yeah. we don't see it as another device, but really, kind of a new met for for people whom a net book or a laptop is too xlibted or doesn't have the kind
of touch screen interface. if apple is successful, that will create desire the same way that the kind of pinch opportunity and i cons created desire for the iphone and that inner face created desire for the ipod. these were all things that didn't exist until apple launched them. >> thank you very much for your time today. >> thank you very much, becky. >> if you have any questions or comments from anything you see here on squawk, e-mail them to us. when we come back, we'll get the news making headlines inside and outside the world of business. stick around.
welcome back, everybody. we are up sharply in the futures. take a mroop you're talking about dow futures up by better than 100 points. s&p up, as well, by better than 13 points. we're going to keep an eye on this today, but this is a big bounceback. meantime, aig is updating its luxury expenditure filing. rules prohibit use of personal aircraft unlessly the ceo is such trip is to a business trip. and happy birthday bubble pack! it turnses 50 today. everyone loves to pop this wrap. here is something you probably didn't know. the product was once envisioned as a new type of wallpaper. i don't know how long that would last on your walls. when we come back, we'll take a trip to the chairs. darren rovell is here with a look at this year's super bowl matchup.
hi, ellen! hi, ellen! hi, ellen! hi, ellen! we're going on a field trip to china! wow. [ chuckles ] when i was a kid, we -- we would just go to the -- the farm. [ cow moos ] [ laughter ] no, seriously, where are you guys going? ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! [ female announcer ] the new classroom. see it. live it. share it. on the human network. cisco.
♪ super bowl's all set now. the indianapolis colts and new orleans saints. darren rovell is our sports reporter. harwood was talking about a play at the end of the game. was is 9:30, 10:00? >> well, it was later than that. >> really? >> yeah. >> i was long gone. >> maybe the 30, could are been a 47 yard field goal.
i'll take to you some highlight. jets/colts game, unfortunately for jets fans in new york, didn't really work out that way. this is the first huge pass toer ed wards from sanchez put the jets up 7-3. trying to become the first rookie quarterback to get into the super bowl. wildcat play to cotchery that got them down to eventually get a touchdown. here's the touchdown pass by mark sanchez to dustin keller put the jets up 14-6 and everyone's loving it and then it turned around from there. you think the jets make it all the way to halftime with that lead, but they don't. peyton manning comes back. >> amazing. >> gets to 17-13 by the half. and then you feel the momentum, this is where you feel the momentum turning. and then it's pretty much over. i mean, that's pierre garcon, and dallas clark, and colts win
30-17. let's go to the vikings/saints game. pretty good game here. here's adrian peterson, who fumbled so many times in this game, but takes the vikings up 7-0. drew brees coming back here, screen pass to pierre thomas. it's 7-7. that's an unbelievable play right there. and it's going back and forth, back and forth. and here's the saints, this is to tie it up at 14-14. drew brees pass to henderson, 14-14. you know, and there's adrian peterson getting it in 21-21 at that point. so it's going back and forth, back and forth. reggie bush here, this ties it up actually 28-21 saints at this point. and then it's 28-28. then comes the point after this. brett favre had a chance to run it. maybe they got a 47-yard field, it goes to overtime and hartly
hits the 40-yard field goal for the saints. it's the first time the super bowl has featured two number one teams since 1993 when it was the cowboys and bills. those two number one seeds, of course. the colt are a 3.5 point favorite. how about the haitian americans, garcon, jonathan vilma of the saints and, by the way, the wrong afc championship year, so the jets' afc championship year and the vikings nfc championship year, that will go to haiti. >> oh, really? >> yeah, they're sending some shirts out. by the way, stub hub tells me the average super bowl ticket price is $1,018 and 18% of the people that bought those tickets so far are from louisiana. >> no kidding? >> the prince, i've seen the future, didn't work out for hem. some people think the saints are destined at this point. >> i don't know.
>> payton manning is raised from by the way -- >> like a robot. >> yeah. >> archie wasn't like that. >> hey, if you talk about archie, he's probably the most marketable guy going to the super bowl. he's the dad of payton. >> no. payton is like a spesman. >> it was unbelievable. you always feel you can't pick against the colts. we felt here in new york that, oh ucti oh, oh, this is the jets. we didn't really think that. >> probably not. >> thank you. when we return, a legend in the hedge fund world, jim chanos joining us. tdd# 1-800-345-2550 tdd# 1-800-345-2550 so where's that help when i need it? tdd# 1-800-345-2550 if i could change one thing... tdd# 1-800-345-2550 we'd all get a ton of great advice tdd# 1-800-345-2550 just for being a client. tdd# 1-800-345-2550 i mean, shouldn't i be able to talk about my money tdd# 1-800-345-2550 without it costing me a fortune? tdd# 1-800-345-2550 if i had my way, investment firms would be tdd# 1-800-345-2550 falling all over themselves to help me with my investments.
the white house versus the banks. >> he has the catch! >> who will win the battle of the wall street gridiron? >> roughing the passer, number 69. 15-yard penalty. >> we've assembled a powerhouse of power players to play monday morning quarterback for the markets and beyond. >> brees in the corner and beyond. >> hedge fund master jim chanos, paul kanjorski, ron paul hit the "squawk" field and play ball as the second hour of "squawk box" begins right now. ♪ you just need that guy. yes, good morning, welcome to "squawk box" here. everything's slo-mo.
along with becky quick, carl is off today. right? it's always slow motion. it looks much more -- the snow's snowily falling -- 15 minutes, mr. shorty, ledge aerd fund manager jim chanos joins us from london, his outlook on the markets. what i really want to talk to him about is china and the call he's been making for a while ol china, especially with what happened last week. your mike is on? >> yes. >> am i interrupting you? >> when you're coughing, your mike is on -- >> washington is putting pressure on wall street to curb bonuses and the controversy over the role of the federal reserve. congressman paul kanjorski faces off against congressman ron paul. tell your friends, all you paulites out there, get your automatic dialers out there. big week of earnings all ahead this afternoon. your monday morning stocks to watch in a bit.
first, a look at this morning's top headlines. >> in those headlines the fdic is reportedly working on plans to package billions of dollars of assets from failed banks into securities. the agency has more than $36 billion in assets on its books from failed institutions that were seized during the financial crisis. the fdic says the plan to use the troubled assets to back securities is still at a preliminary stage. walmart/sam's club warehouse division is cutting 11,000 jobs, 10% of its work force. 11,200. it is outsourcing functions like in-store displays and cutting new member recruitment positions. the white house officials and senate leaders are now predicting ben bernanke will be confirmed as another term. harry reid hopes to hold a vote this week. senior economics reporter steve liesman is here with the latest. steve, it looks likely, but it's not a done deal yet. >> still uncertain. there was a fullcourt press by the white house this weekend
that helped the prospects for fed chairman ben bernanke to win a second term but vote is far from assured. the president, top staff, larry summers and tim geithner made calls to top senators urging them to declare support for the embattled fed chairman. combining our cnbc tally with results from dow jones, about half the senate has declared with a third supporting the chairman, 33-16. he needs 60 votes to overcome the filibuster. john harwood has pointed out, some people will vote with the chairman on the filibuster but against him for confirmation. if the remaining undecided break the way of those declared by party, bernanke would get 70 votes, but it would be one of the worst showings in recent history for a fed chairman. 83% of democrats have voiced their support and about 50% of republicans. now, bigger question for inve investors in the markets, how much effect does this have on policy? it will depend on how strong a vote bernanke and if the fed
sees this as a real challenge or mass hysteria? if it's mass hysteria, fed needs to wait for the situation to settle down. if the fed independence is really at risk, it could cause the central bank to alter policy in a meaningful way, short term and near term. one thing it could do is embolden the hawks. have a big "i told you so" grin on their faces at the meeting this week. it would empower them to call it depoliticize the balance sheet, selling assets like mortgages faster than they otherwise would have. as becky said, majority leader's office said he expects to schedule a vote later this week. i wonder if the statement might read this week, we'll keep rates exceptionally low for an extended period if i get the vote. might put that into the statement. >> tony wrote in and said this could be a situation where, okay, maybe he gets the vote but you're still going to have the house and the rest of the people who are unhappy with us coming
after them with legislation stripping the power away from them anyway. >> embolden krong. >> i think that's a fair bet. it would be a rational thing if we did a national rethink on what we want the federal reserve to do. remember, where's the opposition from? it's from bernie sanders far on the left and jim bunning far on the right. you have one group of people that want the fed to do more for unemployment and they want to open up the space. another one that wants them to not be involved in helping the economy at all. so the question is, where do we come together on this? where's et consensus right now? what lesson should the fed -- >> what about ron paul legislation working through the house that would essentially force them to show their hand on a lot of things that they're not real happy about doing? >> i think that's something that would really -- has a better chance right now with what's going on with the federal reserve. but the question, again, becomes what really was the big difference this week? it was massachusetts. so, what kind of lesson -- if you're on the federal reserve board, what kind of lesson do
you take from this? you take, hey, this is just politics and nothing we have done either way that really explains what happened this past week, or do you step back and say, we need to change policy and change policy in a meaningful way? i would go to -- if i were bernanke i would go to geithner with my mortgages and say, hey, here, you take this. that's what i would do. >> it's too bad the rorschach test we do on -- the interpretation of what happened in massachusetts depends on your own ideology and your own party. i mean, there was a reason scott brown supporters were chanting "41" and it didn't have anything to do with george bush, the first george bush. >> it was 41 votes. >> 41 was about -- oh, this is about bernanke. oh, i like valerie jarrett. no, people are mad we're not moving fast enough with a lot of things. >> yeah, everybody takes -- >> oh, sure, that's what it is. you get so tired of the spin and the rorschach, it means
something different to -- well-being people are -- we actually said they're mad at george bush. they're still mad from the last eight years. come on, they're chanting "41". >> here's a guy that comes from the state with the most liberal health care policy in the nation. and he's the 41st vote to kill a health care policy that is similar -- >> if you're in massachusetts you don't need a national health care policy. you're already paying for your own in your state. why would you need a nationalized one? >> the guy who's going to kill national health care supports the massachusetts health care system, as far as i understand. >> there's a piece about the people in new hampshire and how they're feeling. did you read that? >> no, i didn't see that. no. >> i don't know. if it looks -- it's quacking. it looks like a duck, talks like a duck, walks like a duck, that's what it is. >> the question is, you know, the fed may be sitting there, like 17 people who almost hit the dog on the way to work in the morning. like, oh, my god, what do i do now? i need to drive slower. i need -- how is this going to play in the boardroom is the
question. >> oh, my gosh. >> gosh? you don't say god? >> no. >> and i don't -- the worst we ever saw was volcker. what did he get, 17 nos? >> he's probably going to get 30 nos here. then he gets up in front of congress. what is it that congress wants -- if this ends up creating a national debate about the fed, that's a good thing. i don't think anybody's rational right now. i think it's crazytown down there. >> yeah there's a lot of duck -- you know, the chairs are getting shuffled, who does what. all of a sudden volcker's standing -- >> he's the pan now. how many times -- >> they had to find him and dust him off. he was in the attic sleeping. >> how many times have i come on the show and said, volcker wants trading. i did it for a year and a half and nobody picked up on it at all. it was the right thing to do. >> steve, we'll talk to you later in the program. thanks. the markets, meantime, they are coming off their worst one-day losses since the end of october. if you look tat over the course of the week for the dow, it was the worst week since back to
march. right now, though, you are seeing a positive turn in the futures. not the highest levels of the morning but still in the triple digits for dow futures. you're talking about up by just 100 points above fair value. joining us is jim paulson. there were a lot of people after last week's move down 4.1% for the dow who said, we could be in for a major correction. where do you fall on that? >> well, we could certainty go a little lower, becky, with all this political uncertainty that's being created and the public policy official uncertainties. that could certainly take us lower. but i think that -- i think the thing that's eventually going to wag this market will not be a lot of this uncertainty coming out of washington. it's going to be what the fundamentals of the economy are. quite frankly, those remain fairly good. i mean, we've -- we're continuing to put parts of the economy back together from profitability now being up for four quarters in a row, even in the slight -- latest quarter
with top-line results. we've got jobs that are starting to come back, i think, in the first quarter. we'll have positive job creation. we've got house prices that are up five of the last six months. industrial production is up at 8% rate in the last six months. we've certainly got global growth. that is where i think investigat investors should stay focused, weights going on with economic fundamentals. the rest is a short-run trading dodge. it's going to be difficult to tell when it's going to start and when it's going to end. i would -- i would think it's better to stay focused on the upside potential that still exists over the next year or more rather than what might happy over the next few weeks. >> earlier, we had michele gir ard on who said she's a little worried you could start to see signs of inflation as things take off. that could force the fed's hand maybe as early as june to go ahead and raise rates. she said, you're going to be looking at that at a time when you're still looking at unemployment above 9% for the nation. that could create some harrowing
times. >> i do have some concerns about inflation. not so much this year, becky, as i do beyond this year. i think that we could still have a significant inflation problem. or we may not, depending on how fast we drain reserves and start to tighten. i did hear that earlier. i'm kind of with michelle. i think they may start to tighten by the summertime as well. but i kind of think it's going to be -- less due to, you know, immiment inflation fear other than moving the culture away from a zero interest rate environment. once we create jobs again, if we get three, four months of jobs creation, i think the pressure on the fed is going to ratchet up quite mightily for them to move away from zero. and i do think we might see that in the summer. and i agree, that's going to probably create some waves and some possibilities of additional selloffs, but i think as we worry about that possibility, we
have to remember that if six, nine months, a year ago, we were all hoping we could get to the day where the federal reserve would have to raise interest rates. it says the economy is getting that good again. >> what does it mean for the stock market in terms of how much they've been counting on cheap money being passed around? even when you talk about this idea of the split on the banks that may come from washington, i mean, that was enough to knock commodity prices last week by people thinking there's not going to be enough money going around into these markets? >> well, i think it is a concern. it always is a concern when you shift policy again and it does create some ill liquidity situations, perhaps some selloffs. number one, we have tons of liquidity other here. a trillion dollars of excess reserve on bank's balance sheets. over $10 trillion of cash assets hold by private households and businesses. more than $7 trillion by
households alone. we can afford to have a little bit of a liquidity drain if we're creating jobs again, if we're creating profits again f we've got global economic momentum. and i think that's what we've got rebuilt. so i think we're setting up the situation where the fed can start to drain liquidity, can start to drain interest rates. and the economy and the markets can still fight its way through and go higher. >> jim, it's great to see you. thanks for coming on today. >> you bet. thank you. >> if you have comments or questions about anything you see here on "squawk," you didn't bring up the vikings with him -- >> oh, i didn't. that's not nice. >> anyway, "squawk," if you want to send us something, e-mail us here email@example.com. up next, famed short-seller, jim chanos, his thoughts on the future, hedge funtd industry, what he thinks of the markets after last week's selloff, china. later, congressman paul kanjorski and ron paul face off on the bonus backlash and the future of the fed. stay tuned.
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were published during his lifetime? the answer, zero. shakespeare's plays were first published in 1623. some investors have been bullish on the u.s. while tempering enthusiasm for china as they worry about a possible market bubble. our next guest is making a big bet that bubble might burst. joining us from london, jim chanos, president and founder of kinokos london. what are you doing in london? >> i'm trying to hold the fort down here, joe. as you can see, working hard for you guys. >> yeah. for a while we thought we were going to, again, retake the mantel from london as the financial capital of the world until maybe last week when we saw that we're going to get serious here about some punitive measures against guys like you and actually legitimate guys as well. just kidding.
it could be against hedge fund guys and bankers, jim. what do you make of all the stuff you read in the last week? >> well, it's clearly aimed at the trading activities of the banks, not hedge funds, per se. but hedge fund activities within banks. and i actually think it's a move in the right direction. a lot of commentary notwithstanding on the other side of the coin, i think that we should not have our deposit-taking institutions subsidized for taking trading ricks. they can take trag risk but not with taxpayer money at risk. >> what about some of the other proposals about -- i guess, you know, you're not a bank either so you probably don't care if we tax these guys to pay off gm's and aig's problems? >> i don't think anybody gets preference here, just as the union shouldn't have gotten preference in the health care situation. i don't think any t.a.r.p. recipients should get preference. that's bad policy and that i don't agree with. >> all right. can you believe what's happened
in china recently? it was weird, i think you first told us a year ago about china. what was that, the new york times or the journal? >> he didn't even talk to them. he was making a speech somewhere else, weren't you, jim? >> it became like a stop the presses, chanos thinks there might be a bubble in china and it had been a year we had been talking to you about it. >> i don't think they didn't like me comparing it to dubai 100,000, which i did say on your program, swa tongue in cheek. but one of the paper of record picked it up a few weeks ago. we've been sounding alarm cautiously. i'm giving a couple talks in london, at oxford, this week about it. because our work has really come together on the real estate side of china. it's not -- we're not calling for an impending crash of china or of the shanghai stock market, but in particular the bubble that's been blown up in real estate, both commercial and
residential, as well as other forms of fixed asset investment in china, it's unprecedented. really staggering when you -- one fun fact i mentioned was that right now for commercial real estate, there's 30 billion square feet under construction. now, not all that will probably get finished the way the chinese do these numbers, but to put 30 billion square feet under construction in context, that would be a five foot by five foot office cubicle for every man, woman and child in china. >> wow. >> that's a lot of space. >> and you've said also tongue in cheek that it's not quiet but almost a skyscraper for every pass e peasant moving from the pardon me at this point. >> i didn't say that, but you get the gist. the amount of fixed asset investment happening here to keep the gdp growth -- let me point out something that's very, very important to your viewers.
in the west gdp growth is the residual of the free market. everybody does their thing, businessmen plan, consumers buy, save, invest, waefr. gdp is the end result. in china it's a different thing. very similar to the gold old soviet union. gdp is a planning tool. gdp, we start with the gdp target and then figure out how it is we're going to get there. and that is a much, much different animal. and i find it interesting that western investors that would eskew government involvement in things like health care or automobile, industrial policy, where generally governments don't do it that well n china's case they're more than happy to have five to nine guys in a room figure out a very complex economy and always seem to deliver a gdp number right on target, quarter in, quarter out. that strikes me as a little fishy. >> the central planning, we see it, but i've wondered about that myself, jim, that if you keep
allocating capital as -- they can do whatever they want because it's centrally planned, if you keep allocating it where it really doesn't make economic sense, you figure they're very powerful over there. they can do it. they can hold their currency down. they can do all these things. but sooner or later do market forces take over if a nonmarket economy? >> absolutely. command economies can marshal resources very, very well. when krucoof banged his shoe in the early '60s, he said, we will bury you. he was talk about economically, not military. the soviet union grew very rapidly after the post-war period, as did germany and japan. soviet union marshalled resources, moved resources from urban to rural areas and threw lots of capital at it. germany and japan did the same thing. where they difed was once that
all happened, the german and japanese economy began to use those inputs more and more efficiently. so the need for increased amounts of capital dropped off. in china, to a lesser extent the asian tigers in the '90s, we've seen more and more fixed asset is needed for a dollar of gd. . they're getting less efficient, not more efficient. that's a troubling sign. one other point, on the political versus the economic, it's an interesting aside and others have made the point before me, but i find it intrigues as we've done our work that it's become very apparent that china has imbraced capitalism to keep the socialist elites entrenched while in the west we've embraced socialist to keep capitalists entrenched. >> we also saw that people that aren't bearish on china, aren't worried about a bubble said, look, they've got it under
control. look what they did last week. they know they need to keep things from overheating so they have a firm grasp of the situation. is that true? number two, how bad would it hurt us if your worst case scenario, how much would that hurt the rest of the world, if comes true? >> what would hurt -- i think primarily one much our conclusions is that it would hurt the building materials sectors, the commodity plays in the west, the iron ore miners, steel manufacturers, copper, all the places you know demand is because of the china bid. and i think that that will be the place to -- we're not making any macro call on exchange rates or current account flows. that's well beyond what we do. but in the world of what we do, looking at companies, i would be very leary of any companies that are exporting raw materials into china to build up this -- to build up this real estate bubble. >> i mean, it won't -- it won't
derail a global recovery and cut a point off our gdp for the next five years or something like that? >> i -- i'll let other people figure that out. but i do -- i do see all the signs of a credit-induced real estate bubble over there that i think is going to be a doozy. >> they can't fix it at this point, right? you can't raise reserve requirements at a bank and think everything's going to be fine. >> the problem is, fixed investment is now over 50% of gdp. and is going to -- if the numbers forecast for this year is right, it's going to be over 60% in 2010. no country has ever done more than nine years above 33%. and china will be on its 12th or 13th year now, well above that. nosebleed levels we've never seen. this is unprecedented. this is a capital spending boom, the likes of which modern economic history has never seen. >> right. mr. chanos, mr. shorty, we appreciate that.
i won't tell anyone that that's your moniker. we appreciate you coming on today. hope to see you in studio for a longer discussion when you get back. >> i'd love to do it, guys. thanks. >> you are welcome. still to come, it is down to the wire for big ben. the white house trying to get the votes needed in the senate to confirm fed chairman bernanke. one of his biggest critics, ron paul, joins us, along with another congressman named paul, kanjorski. the debate of the bernanke vote. music plays
when it comes to things you care about, leave nothing to chance travelers. insurance for auto, home and business. we don't go lower than 130. big deal, persuade him. is it wise to allow a perishable item to spoil? he asked, why leave a room empty? the additional revenue easily covers operating costs. 65 dollars is better than no dollars. okay. $65 for tonight. you can't argue with a big deal.
welcome back to "squawk box." still to come this morning, don powell, former fdic chairman, bank of america board member. is he back in for sure? i saw that he was on. anyway -- he's not back. >> i don't think so either. >> anyway, were you really going to tune in for that? in 30 minute, paul kanjorski, he wrote the amendment -- we love him but i don't know that -- >> i think he had to stay home today. >> why? >> he couldn't do it today. >> yesterday i saw that and my e-mail hasn't worked for 24 hours and i still new.
regulatory to break up too big to fail financial institutions and then we'll hear from the other side of the aisle, ron paul, the congressman with his view on the bank backlash. first, a look at what is making headlines this morning. >> let's get a check on the markets right now. we've been watching those futures. they have been indicating a sharply higher open this morning. those dow futures are higher by better than 100 points. when checking out the future. this is coming after a terrible week last week for the dow. it was down 4.1%. the s&p 500 down by 3.7%. meantime, in headlines this morning, some are hoping for hiring. the national association for business economics says u.s. companies see their hiring picking up in the first half of this year. that's according to a newly released survey. steve liesman will have more coming up in a few minutes. while many companies are planning to hire, walmart's sam's club division is not on the list. sam's club is cutting more than 11,200 jobs, about 10% of its work force. outsourcing some functions,
while eliminating others. also at the box office, "avatar" is about to sink "titanic." "avatar" is just $2 million shy of beating the all-time box office record for ticket sales. that was set by "titanic" back in 1997. both films directed by james cameron. "avatar" has sold more than $1.8 billion in tickets when you look at it globally. any comments or questions about anything you see here on "squawk," e-mail us at firstname.lastname@example.org. when we return, we've got stories making headlines and then the interview of the morning, congressman paul kanjorski and congressman ron paul. we'll talk to them about the future of the fed, the possible breakup of the banks and much more.
welcome back, everybody. the white house expressing confidence about ben bernanke's confirmation. but it is clear bernanke continues to face opposition to his phenomenal nation to a second term. for more on this and the other many controversial topics being debated in washington we're joined by congressman ron paul. our guest co-host for the next
hour and a half is paul kanjorski, chairman of the capital markets subcommittee. good morning and thank you for being here. >> good morning, becky. >> good to be with you. >> congressman paul, why don't we start out talking about bernanke. the white house is at this point expressing confidence he will be renominated. obviously, that vote goes true the senate but the house will have something to say in terms of the regulations they put forward. what do you think about his nomination process? do you think it will go through the senate? >> oh, probably. but it might be just wishful thinking. you know, they have to sort of put a spin on there and try to build up some momentum. i don't think they know for certainty. it looks like he may well be appointed. but, you know, i don't know whether that's the whole issue because i think it's been tremendous that we in this country and in the congress now have addressed the federal reserve for the first time in many, many years and say, what responsibility does the federal reserve have in the creation of
this bubble and the crisis we have? and bernanke is symbolic of, of course, the fed. i think this is great stuff. and, besides, it makes -- put more emphasis on us having more transparency of the fed because, you know, the reason we're going to have a filibuster or potential filibuster in the senate is because we've been on hold until they have a vote. the people are only asking for a vote. we had the vote in the house. we had -- and it's been passed. we have 37 317 co-sponsors. in the senate, the people who support this position, left and right, are saying why can't we have a vote? because they know it's going to pass. because the american people want to know who the close friends are of the federal reserve, who they bail out. and what is going on. so, i guess this is tremendous. i mean, i don't think bernanke should be reappointed, but even if he is, he's wounded, the attention's on the fed, the economy's going down, the bubble has not been -- the correction has not occurred. so the american people will pay
a lot more attention to the federal reserve now than ever before. i consider that very, very beneficial to all of us. >> what do you think the odds are that ben bernanke gets reappointed and talk about this legislation, what it might mean for the fed. >> well, i sure do hope they reappoint mr. bernanke. i had the occasion to work with him through the rescue period. and i found he was incredible. that's not to say everything he's done during his tenure at the federal reserve, as chairman or governor, was what we would have liked. but we never get 100% performance from anyone. i just think he's extremely able. i think he's got an ability to take crisis and manage it well at critical times. and i think the fed has done a magnificent job. i have a lot of respect for ron paul, but his legislation i voted against it. i would continue to oppose it
because i think it compromises the whole idea of a central, independent banker. we've seen a history of 175 years. when you didn't have an independent banker and the constant crisis we've had. at least now, we haven't had a crisis for 75 years, we're managing it. when we needed good management, it was the chairman of the federal reserve that stepped forward and did a lot of -- did a lot of the important things that without that, the rescue would not have been accomplished. you know, i just heard a little tone in ron's voice that he was almost happy that we haven't fully recovered. don't be happy. this is -- this is the american economy. this is our economy. it doesn't long to any one party. if it belonging to any party, it's the republican party. mr. bernanke was a republican appointee. the crisis came out of the republican administration. i hope we leave all that aside and recognize that we are in a recovery position now. let's concentrate on getting that done. let's not rock the ship. if we do, we could cause untold
difficult for the american people, the markets and the american economy. let's go easy and gingerly on this. >> congressman paul, was there glee in your voice? >> i think he's overreacting. i think he's trying to play a little game there. i do want to challenge one thing paul did say and that was there was no crisis. it's 1913. i mean, we've lost 98% of our value of our dollar against gold since 1913. we had the inflation for the world war i, a depression in 192 1shgs 1, inflation of the 1930s, we had a 15-year depression due to the federal reserve. then we had guns and butter in the '60s and we financed that through the federal reserve. and then look at the '70s. the '70s wasn't a crisis. >> my god -- >> what in thunder was it? >> we've had four or five major wars, too. >> well, why should you use the
fed to finance the war? you're not -- you don't have the right to debase the currency to fight a war? undeclared wars, too. they're undeclared. >> don't you think you constitute yens are living a little better in texas in 2010 than they were in 1932, 1950, 1975? isn't the american economy meeting the needs for increasing the middle class -- >> okay, what makes you think that had anything to do with the fed? maybe it was in spite of the fed. maybe there wouldn't be 17% unemployment right now if we didn't have the fed and we wouldn't have 27% unemployment in michigan. so this whole idea we're doing better -- >> 17% and 27%? those are really inflated maximum approaches. >> no, wait, wait, wait. no -- >> you're counting -- >> count all -- paul, you're not quoting the right figures. the fed says -- i mean, the treasury says it's 10%, but if
you count everybody who quits looking for work, it's 17%. free market economists, which are more reliable than government economists, say it's 22%. to downplay the unemployment rate and say there's not a crisis and unrelated to the bubble the fed created -- the problem is we're always looking at what caused the crash. even this new position is looking at what caused the crash. did they ever ask? what caused the bubble. the bubble causes the crash but nobody says, where do bubbles come from. >> i think we had a couple of bubble, didn't we, ron? >> the federal reserve creating too much money at interest rates of zero percent. there's nowhere for them to go right now. interest rates are zero. if you have another downturn, what are you going to do, make minus three? they'll try to do that. >> insteftd gold standard i would like to go back to the diamond standard. >> i'm glad you brought that up because i want to go forward to a gold standard ppt i want to prevent the federal reserve from stealing from people and taxing people by doubling the money
supply. it is crucial and unusual punishment to the economy to allow a secret organization, like the federal reserve, inflate the currency, deliberately destroy values, destroy the people who save. that's what you're destroying. >> have the congress authorize the auditing of the federal reserve so the politicians in congress can influence and effect and help -- >> no, you're missing -- you're misinterpreting the bill. you should read it. the bill says congress has nothing to say about it for six months. then they can -- >> ron -- >> wait a minute. let me finish. then they can look at it. what you're arguing is the case for the s.e.c. -- say the s.e.c. find out something about a bad company. then they say let's cover it up because it might hurt that company. when the fed knows something about a bank, you want secrecy because you say it might hurt the company or the bank if people know it's in trouble. you want the federal reserve to
cover up so we don't know. they can spend money, hurt the taxpayer, destroy our currency and get us in depression and we're not allowed to know about it. there's no place in the constitution that authorizes that kind of power. >> ron, i've been in congress long enough, and so have you, and we've used the general accounting office to put pressure on federal agencies, both independent agencies and nonindependent agencies -- >> that's good. >> we call for an audit of an agency, that send the message that here comes congress. we're going to take actions to curtail what you're doing. that's what we're worried about -- >> you're reading into it. i wrote prohibition into the bill for that. morally speaking, don't the people have a right to know what the fed is doing, what kind of deals they make with foreign governments, foreign central banks, international financial organizations, private banks? we have a right to know. we have an obligation. we have a moral obligation. besides, we're in this horrendous mess. it was the fault of the federal reserve. to say, oh, the fed is
wonderful. let them create all the money. put bernanke back in. he had nothing to do with it. i mean -- >> i was -- >> american people are way ahead of you on this one. the american people have awakened, i'll tell thaw. >> i was at a hearing the other day when your side proposed it wasn't the federal reserve, it was the gse's -- the government sponsored enterprises that caused this thing. do you know what caused it? i don't. that's why -- >> the federal reserve did. >> that's why i voted for the commission to do the study. >> the federal reserve causes the bubble but you put -- you put kerosene on the fire by allocating credit and say, you have to put money into a certain group. if the fed creates money, we don't know where it's going to go. but because we say, put it in the housing, the housing bubble occurred. put it into medicine, medical prices go up. put it into education, education prices go up. >> wait a second, you think the fed is responsible for higher education costs and higher costs for the health care? >> yes, yes.
because the value of the dollar goes down and you don't know where the money's going to go. but if you have a free market in distributing cell phones and computers, the market overwhelms the inflation. prices actually go down. but the money is out there. has to be put into something. quality does not go up. this is why the cost of medicine goes up without the quality going up. education, everybody gets a college education but the quality of education goes down. and it's the fact that when you allocate credit, if you do it in housing, it just puts fuel on the fire of the bubble. but you cannot have a bubble without easy money and easy credit. zero percent interest rates is an easy money, what is? >> i want to point out and say, stop it. i'm not going to argue there aren't causes and effects out there that we should be studying and looking at and taking sometimes corrective action. that's what we're attempting to do now, is we do regulatory reform, as you well know.
we spent the last year intently studying what could be done to try to prevent and project what may happen in the future and what actions could be taken to prevented those actions to stop these crises. let me say, it isn't all bad. we had the creation of the s.e.c. and the strong regulatory acts of the 1930s, and we prevented a financial cries in th crisis in this country for 75 years. even though every 25 years -- >> no crisis in the '70s? ask paul volcker if he had a crisis in the '70s. >> no, we had inflation and we were able to bring volcker in and his policies and correct that inflation. and that's what the system should do. >> so what do you call that? a minor correction but not a crisis, huh? >> much different. >> unemployment rate high -- >> we didn't have a total collapse this time. maybe what we should have done is let that happen and then all of you in the free market system would have been perfect. we would have been wiped out for
dk aids and everybody would have been in a collapsed situation. then you'd be happy. what volcker did this time was act with responsible leadership with the secretary, treasury and president, your president, your secretary president, a republican, not a democrat, and they did a pretty good job of rescue. but all of you fellows want to label this as having been a failure because you really don't want to see it succeed. i think you have a negative attitude -- >> that's wrong. we want to prevent it. if regulations are so good, i know we're piling on the market for regulations, the s.e.c. would have prevented this crisis, the s.e.c. would have prevented the enron scandal, sarbanes oxley would have prevented -- every time you put on regulation you chase our businesses overseas. that's why the businesses are leaving and you're going to do a lot more of that because the burden will be so great and that's why we're not having a good recovery -- >> then we should just -- >> taxes are coming down, regulation's coming down. >> according to your theory, ron, we should allow then
business to go uninterrupted, do anything at any time, with anything, because they can't make mistakes. >> no. you allow them to go bankrupt. you don't bail them out. yes, we would allow general motors to do what they want when they screw up and they go bankrupt. let them go bankrupt. you don't take good people's money and bail them out. you don't bail out -- >> do you accept the proposition that if we -- if we hadn't gone into the rescue program a year ago, almost every large bank in the united states and in the world would have collapsed within 72 hours? >> no, no, no, no. some would. some would, but we'd be over it by now. in 1921, paul, that's exactly what we did. we still didn't accept all your economics inspect 1921 the recession/depression, it was severe after the inflation of world war i. hands off and over in a year. that's always what happened before. with they inflated, caused a bubble, a correction, but in the
1930s hoover was the culprit and roosevelt followed up and prolonged the agony for 15 years. that depression didn't end until after world war ii. believe me. people weren't doing well until after then. yes, you want hands off but you to want enforce the laws against fraud and enforce the law of bankruptcy. that's a federal regulation. we don't allow the bankruptcy, we take the good people's money and bail out the bad investments, prop up awe the mistakes and that's what you're doing. you're pouring out the money, hoping to patch up the hole in the bubble. it's not going to work. believe me, i'm not happy about it. no matter what you say. >> congressman paul, we want to thank you very much for your time. we appreciate your joining us today. >> thank you. >> okay, thank you. we appreciate your time being here. congressman kanjorski will be with us for the rest of the program. when we come back, we have hope for job seekers, courtesy of the national association of business economics, details after this.
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increased demand for the second straight quarter. senior economics reporter steve liesman has more of the details and a special guest, steve. >> thanks, joe. the members of the national association for business economics, see better demand, better profits but higher cost. the january industry survey says their business plan to increase spending and jobs in the coming month. you can see the change relative to october right there. profits are better, demand is better. but prices and costs also going up. jobs are better but still negative. joining us, ken simonson. what does this tell us about where the economy is going here? >> i would describe this as small but widespread optimism. the outlook for gdp, now more than half believe that gdp will be up more than 2%. there are a few who believe it will grow more than 4% in 2010. every sector has more firms say they'll be hiring more and doing more capital spending. >> let's go right to the jobs outlook. it looks like we're getting to a point in this survey where we might have positive job growth
when i look at the chart. >> modestly positive. a few firms are adding each quarter to the number who say they will increase jobs, but there's still quite a few, particularly in goods produce, such as construction where i work, that are going to be cutting jobs in 2010. best news is in services. >> how about the capital spending outlook? >> likewise. almost half the firms in every sector say they will increase capital spending. but in goods producing, there's also substantial number who still intend to cut capital spending. on structures in particular, most firms still expect the cut. >> ken, unfortunately, we're tight for time. i want to thank you for coming in here. brings us the nabe survey which is a little good news. thanks, ken. >> good to hear. steve, we'll see you in a bit. coming up, the white house scrambling to get the votes needed in senate to confirm bernanke. we'll talk to jeff america
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the vote to keep ben bernanke as fed chairman is coming down to the wire. ♪ should i stay or should i go >> democratic senator jeff merkley of oregon says no. republican senator judd gregg says yes. both will explain their decisions right here on "squawk box." the bulls and the bears face off. after last week's selloff, can investors expect a rebound in the final week of january?
"squawk box" begins right now. welcome back to "squawk box" on cnbc, first in business worldwide. i'm joe kernen along with becky quick. carl's off today. we have congressman paul kanjorski, member of the house financial services committee and chairman of the capital market subcommittee. he's here for the rest of the hour. you should have been like a radio guy with your voice. do people tell haw? >> no. really? >> it is silky. >> it's what? >> it's a silky voice. >> let's check out the market -- it is, though. it's like -- >> it's a smooth, silky voice. >> yeah. the future -- dow jones is indicated up about 87 points. loss 5% in the last three days
of last week. and on 10,000, that means over 500 points. >> yeah, it does. >> and this is the last week of january. first week was good. a lot of people say as the first week goes, so goes january, so goes the year. we'll see. this is an important week to see whether the s&p and the dow make -- we've got a lot of earnings which dictate which way we're headed. the fed fight coming down to the wire. at stake, approving ben bernanke's second term as fed chairman. white house officials and senate leaders are now predicting that he will be confirmed for another term as fed chairman. senate majority leader harry reid hopes to hold the vote later this week. earlier on "squawk box," one of the top critics of the central bank, congressman ron paul says he wants the senate to just say no to bernanke's renomination. >> i don't think he should be reappointed but even if he is, he's wounded, attention is on the fed, the economy is going down, the bubble -- the correction has not occurred. so the american people will pay
a lot more attention to the federal reserve now than ever before. and i consider that very, very beneficial to all of us. >> chairman bernanke's first term expires this coming sunday, january 31st. senator jeff merkley will tell us why he's voting no on his reconfirmation. senator gregg will tell us why he's voting yes. both coming up later on "squawk box." a busy week ahead in earnings. lots due out. i can't stop that. i don't need to say it, but i can't stop the -- anyway, the central part. a relatively quiet session before the bell. hold on to your hat this afternoon. after the close we'll hear from apple, texas instruments and amgen and many, many others. tomorrow's notable release during "squawk box" include a couple dow components. more than a couple. dupont, travelers,ones johnson johnss johnsson. and wednesday, caterpillar,
boeing. thursday, at&t, procter & gamble, 3m, microsoft, motorola. on friday, chevron, honeywell, mattel, among many, many others. >> a lot to do this week. >> scratchy throat. you're out of here. carl's in washington. >> earning central, the "e" team is you. >> it's me. there is no "i" in team. the dow, as we're mentioning, coming off the weekly biggest percent drop since march 6th of 2009. let's talk with david malpass, the former chief economist at bear stearns. david, you start to see a big drop over a few days, like we saw last week. what's that mean? what do the market players think? >> hi, becky. hi, joe. i think china was part of it. they're beginning to tighten,
but while the u.s. is maintaining this ultradovish monetary policy. so the market's got to be confused looking at the differential between china and the u.s. then i think the second thing that hit the market hard was the president coming back after the massachusetts vote and, instead of talking about jobs and small businesses and taxes, which was the clear message of the vote, he went over onto the banks. so people's heads are spinning say, what is happening in washington? they're spending like crazy. the state of the union message comes up this week. cbo is going to preface it with a huge deficit estimate tomorrow. i think it will come out tomorrow morning. so we've got washington out of touch and that worries markets. >> david, may i jump in for a second? i don't know what's happening to the market, what's happening in new york, or what's happening to the american people, but may i point out what the president talked about the other day is a piece of legislation that was enacted in the house of representatives in mid-december,
was passed through the committee of financial services a month before. so, there's nothing new or shocking on too big to fail. it's my amendment. i know that at a point everybody gave up talking about it because it doesn't become the flavor of the moment. but the reality, we've been on that course for a year now. >> but, mr. kanjorski, i understand that. so maybe the timing was unfortunate. it came right after a vote where the clear -- the thrust of the vote was for washington to stop spending money. and then it was like a change of topic. i want to compliment you. back in march of 2008 -- excuse me, 2009, you had a hearing where you changed -- where you dealt with and addressed some of the problems of small businesses with your mark to market hearing. the stock market started going up right at that time. >> it was kanjorski rally. >> i think it was the kanjorski
rally. and it would be good. i would love to see an obama rally where the president was out talking about jobs and growth. >> david, let me give you a prediction. that's exactly what is going to happen. you heard steve's statement of what's happening in the overall economy and some of the statistics that they're starting to get. i predict eight months from now all of us are going to be saying, gee, why didn't we all see this coming, unemployment's going to go down, the economy is going to rise at a greater rate than everybody had been predicting for the last six months. and things are going to start feeling pretty well. because the course of action we took a year ago or 14 months ago is finally beginning to work very slowly. and over the next eight to ten months is going to work a little more. and if all the naysayers take their time and lets this thing happen, as it should naturally roll out, i think you'll be giving us great predictions eight months from now. >> i was complimenting you on your hearing, but after that
subsequently washington did a whole host of things that really pushed the unemployment rate much higher than it needed to be. so you're right, we may have some kind of a recovery this year. but it's coming from such an unnecessarily low base. for example, the fiscal stimulus that was put out in 2009 cost people jobs. it's when washington sucks the money in, it takes it away from small businesses. and so i don't agree with the idea that people are going to look back on 2009 and say, what a wonderful job washington did. >> well, david -- >> they will say what a job mr. kanjorski did with the mark to market hearing. >> and i love that credit, david, but quite frankly for three months in the beginning of '09, when we lost 2 million jobs in three months, we had to take precipitous action to stop this drain, or by the end of the year we would have been down 4, 5 or 6 million jobs. that would probably be irreversible in our society. >> but there were opportunities to have reduced the number of
job losses by half a million, by a million with sounder dollar. why did the administration pursue a weak dollar policy all through 2009 -- >> david -- >> that only shifts the money over to asia. >> you know what -- >> it's a big mistake. >> i agree that we don't have our fiscal house in order and we haven't had our fiscal house in order for a goodly number of years. let me cite something to you. i didn't hear your voice necessarily out there or many others on the right. and that is, what happened when this terrible deficit was run up, starting in 1980 until now? 30 years. and if you look at who occupied the white house in that period of time, you'll find out 24 of those year were republican years. and just eight years were democratic years. and you'll find out that overwhelmingly 90% of the increased debt of the united states from 800 billion, when ronald reagan took office, until just recently 13 trillion, 90% of that was incurred by democratic -- or by republican
presidencies. >> i'm with you. there needs to be sweeping change. but i do think that the fiscal deficit as it goes up this year -- you're looking for two gaish for a $1.9 trillion increase in the national debt just to get us through november. and so i'm -- i agree that lots of mistakes were made by both parties through history. >> now we're together on that. and let's start -- stop talking about parties and let's start talking about what can be done, both positively and negatively and some mistakes and get them corrected together. >> right. but i do think that that means to talk about the weak dollar policy coming out of the fed, which could be changed tomorrow and the money could come back to the united states. we could talk about the small business problems that are -- that are running through the banking system. so using february -- january and february right now to attack the banks, to launch a major attack on the banks, is not the right way to get small business lending restarted. >> well, what do you mean -- i
think by attacking these large banks and trying to put into place some new regimentation that won't cause us to go over the precipice again, you think that's going to destroy small businesses? >> i think across the country small businesses are having a huge problem getting credit because the banks are under the gun all of the time. that's not to say the banks didn't make mistakes. they made huge mistakes. the question is, right now, while we're in the crisis, shouldn't you be focused on other things? meaning restraining government spending? they're channelling the spending, it's still left over from last year's fiscal stimulus bill and still spending it when the national debt is going through the roof. >> david, we have to leave it on that note. thank you very much for joining us today. congressman kanjorski will with be with us for the rest of the program. david, we'll see you again. >> a true guest host we have here. >> yeah, he's been jumping in. it shows you how washington and wall street have just collided, to have a congressman talking to
an economist, that can wrap everything up, it would have been unusual two years ago. >> i'll take my paycheck back for today because i'm just watching this -- watching this go on. >> well done. >> now that conan's done his deal, maybe i can sit down with your people. >> you're up for a lot of jobs. you know, i think morgan freeman does katie couric now or -- >> the voiceover at the beginning of it. >> michael douglas is doing that. could you say, you're watching "squawk box"? we might get you to do that. >> joe, i can try. >> all right. next, more of today's top stories. plus, the vote for bernanke's second term as a chairman. we have a senator who will vote no, senator merkley of oregon, he'll tell us why he's not on the bandwagon and one who will tell us why he is. tdd# 1-800-345-2550 investors got lost in the shuffle. tdd# 1-800-345-2550 investment firms forgot whose money it is. tdd# 1-800-345-2550 enough is enough. tdd# 1-800-345-2550 it's time investors got what they deserve.
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indicated higher. those dow futures up by about 88 points above fair value, well off the highest levels of the morning. still, looks like it will be a strong open if things continue at this pace. in the headlines this morning, haiti's prime minister and government leaders from around the world are meeting in montreal today. u.s. secretary of state hillary clinton will be attending as well. this group will plan how to move from immediate haitian relief to long-term reconstruction in the country. >> momentum is changing in favor of fed chairman ben bernanke. over a dozen senators are not convinced that bernanke should be confirmed for a second term, including jeff merkley, a democrat from oregon and a member of the banking budget and health committees. good morning, senator. >> good morning. it's great to be with you. >> great to be with you as well. your party's in the white house. they're making a real push for this, senator, so you're actually -- on this issue you're going against the wishes of your
party? >> bernanke has been at the table of economic policy, the inner circle for eight years. he's been there when derivatives were unleashed, been there when the leverage on the investment banks were unleashed, there when proprietary trading expanded and threatened banks. so through every major decision he has amplified risks in the system. all of that came crashing down last year. i don't think that the person you want to rebuild your house is the person who helped set it on fire. >> well, the proprietary trading, as we know, that didn't have anything to do, really, with the crisis this time around. there would be a lot of members of congress, probably, that enabled fannie and freddie and homeownership, something that we strive for, there's a lot of people there that shouldn't be re-elected, too. >> there's plenty of risk -- plenty of fault to go around. but even when the fed had primary responsibility for consumer protection, and the mortgage markets in '03, '05,
did a flip to subprime and wall street journal study was 60% of those who were getting subprime loans qualified for prime loans because essentially brokers were getting these steering payments to steer people into bad loans. fed had responsibility for it. bernanke was missing in action sdmree wasn't running the fed but because he was part of the overall picture, you think even with the job he's done in the last -- since he's been chairman this time, that doesn't -- that doesn't help you give a thumbs up for your nomination? >> actually, he was a member of the fed. he wasn't yet chair. then he was chair of the council of economic advisers. then chair of the fed. even when he was chair of the fed, folks came to him and said, we have dangerous overinflation and house pricing and we have a big problem with subprimes. he said, i've heard it before. don't believe a word of it. he just never came to grips with any of the risk factors that set us up for this economic collapse. >> we've done a lot of, you
know, look back at actually what went into it. we vilified a lot of the ceos as well. it's hard to find anyone -- there's a few people but hard to find anyone that realized that the housing bubble, to the extent that there was one, could result in a 30% or 40% drop. you would have had to have been crescan to figure out all of the ramifications, and the aaa rating you got from the agencies, the credit default swaps and aig. so many pieces of the puzzle to get to that. i mean, smarter guys than us. greenspan, all these guys, larry summers. i mean, it was pervasive. no one knew this was coming. can't you look at the guy for what he's done since then? >> he's done a pretty good job with the fire hose, opening the windows, establishing additional credit to help us get true this process. still, that's this last year. the things he did in unleashing the risk factors really set this whole deal up. and so, no, i don't think the
person you want to rebuild is the person who always took short-term wall street profits over a stable, successful financial structure for america's working families. >> go ahead. >> senator k i jump in there? >> you bet. >> of course, i defend your right to make a conscience vote, either positive or negatively, any time you want to. i just want to tell you that i had an occasion to work with the chairman over these last almost decade. and particularly after the crisis. and i found him to be unusually creative and unusually focused and really an excellent leader. and i wonder, have you put weight in what you may be setting to reverberate around the world? at this point in time in our recovery we remove the chairman of the federal reserve and just put some substitute in place, untested and unknown, probably most people are saying, mr. cohen would be the substitute, and he really has a
history 6 being an absolute bureaucrat because his whole life has been spent in the federal reserve or similar entities. >> i have put a lot of thought into it. i was the only democrat to vote against it. i went back and read the entire eight-year record. you can see an extensive analysis in "the washington post" of the many opportunities he missed when he wouldn't advocate for reducing risk or protection for consumers and set up every piece of this in the investment banks, in the commercial banks, in the derivativetives that created the network of risks between institutions. now, i very much wanted to see a vision for taking us forward. really, when bernanke came to our committee -- i'll agree with you. he was a very scholarly, very nice man. this is nothing personal. but i think as we move from this year of basically rescuing wall street, we are now moving to rebuilding the american economy that is not about profits on wall street, but about success for families. and that takes a very different
viewpoint of standing up for families. we never saw in his eight-year tenure and he hasn't presented that as he's come before the committee. >> well, best of luck. think it over. i know you'll cast the right conscience rote. if there's a doubt we make a mistake, you may want to pull in the support, not just the president, both sides of the aisle that have worked with mr. bernanke. >> i'll tell you very much, this is about supporting the president's pivot from the year spent on wall street to now fighting for our families. >> i guess you probably don't support the treasury secretary at this point, i guess, right? you think he's got to go? >> the treasury secretary's not up for nomination. >> no, i know. but if larry summers had a chance -- larry summers weighed in on credit defaults. if you went down the list of people that didn't realize that the risk in the system was too great or the leverage in the system was too great, you wouldn't have anyone to put in bernanke's place because there's no one left. i don't know. who can go in there?
>> certainly as the senate we have the responsibility to advise and consent. and i think that the president is looking for a way to say, this isn't all about wall street. this is about the success of our families. i think a change in the chairman of the fed would help send that message and help have someone who next time wall street says, we're making a lot of money, we're making a lot of money off the securities, don't mess with the ray they're rated -- >> bernanke's not from wall street. >> no, but he was on the fed and he was chairman of the fed and he was chair of the council of economic advisers all the time these issues were growing. not a single one of them -- it isn't there were three successes over here and three failures over here. it's that on every single piece he failed to come forward and address the growing risk, the growing bubble. >> senator, we appreciate your time this morning. thanks for telling us your opinion, telling us why. >> thank you. >> we'll see what happens. >> great to be with you. coming up in our next half hour, a senator who plans on voting yes on bernanke's renomination. senator judd gregg of new hampshire will be joining us to
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welcome back to "squawk box" on cnbc, first in business worldwide. we are one hour away from the opening bell. our guest host today, the very moderate democratic congressman paul kanjorski. he just told me. he's with us for the rest of the hour. what did you call me? beg gangis khan? >> no. i did classify it. >> steve liesman with the bernanke countdown now coming down to the wire. senator judd gregg will tell us why he's going to vote yes to approve bernanke for a second term. >> lawrence khan, joe, lawrence. his uncle. let's check out the headlines, meantime.
walmart's sam's club division is cutting more than 11,000 jobs, that's about 10% of its work force. sam's club is outsourcing some functions, things like in-store advertising displays and cutting new remember rekrurment functions as well. war of words between google and china is escalating. a senior chinese officials the country has every right to use the internet to punish citizens who challenge communist party policy. things are definitely heating up. goodle is threatening to shut down its chinese website because of just that. the price of gasoline is edging down slightly over the last two weeks. the lundberg survey puts the average price at $2.72 a gallon. that is down about 1.1 cent. steve liesman be , we do a for. >> you you do. >> we're going to try -- >> the relationship -- >> a box in a box in a box. >> did you see jon stewart do keith olbermann -- hold o i didn't introduce him. i didn't read the thing yet. come back to four.
come back. >> meet me on camera four. l >> the ben bernanke countdown getting serious. let's get to steve liesman. >> there you go. excellent. rl done, joe. you could be an anchor. you could be an anchor. a little more work. >> it will never happen. >> i want to update stuff from last week. we had information about determine you can ses, bernanke or kohn. it could be dudley, whu the vice chair but they'll take a vote and we understand this would make this guy the chairman of fmoc. >> if they could decide their own fate -- >> yeah. let's go to today. only six days remaining. remind the fomc vote, not senate votes. he's going to write a memo on leadership to harry reid, who has done a great job leading the senate and this whole issue. we understand some people are angry at reid and why did he let this go to january?
we have to figure out, if the term expires, do we put a minus sign here? thought on that, joe? >> i can't see the thing because looking at you. down have a monitor. i'm lost. let me look over. no, don't put a minus sign. >> once the term expires, what would you -- >> term plus. >> plus sign. this issue we talked about earlier. is what going on rite right now mass hysteria? does all this go on -- that's not a joke. why would you do that? >> we don't know what you're joking. he tried. he tried -- >> it's just random. >> none of us know. >> i'm not supposed to look at you here but here. >> none of us. >> that's the issue when it comes to policy. >> that wasn't a joke? >> mass hysteria from massachusetts or something -- >> oh, that's why you're calling it mass hysteria. >> you didn't get that? >> so it is a joke. >> i did that in the report earlier. >> it was a joke? >> it was sort of a joke. >> we don't get any of your
jokes. we keep telling thaw. how long have you been here? >> eight years. keep trying. you can't -- look, if you had to stand -- come here, joe. >> no. i'm not getting uppy don't have a remote. i'm attached. >> oh, it's in your contract, you can't get up, i'm told, by -- >> it's getting harder and harder. can i turn yet? >> you can -- oh, see, you're looking at me and you can zoom in on joe. >> you could. thank you, steve. >> did you get something out of this, joe? the main thing is there are six days remaining and we think there's going to be a vet some time toward the end of the week. >> what did you think about the senator from oregon? >> i don't get it. i mean, i don't personally -- what is it they want the fed to do? more or less? >> you have to decide in your party whether you love this -- >> my party? what do you mean my party? >> you have to decide whether you love this populism or you don't love this? you heard him. he was able to say -- you heard him say, i want the fed to help families. he kept saying that over and over -- that's never -- >> what does that mean? >> it's never unpopular to say
that that's why people say things -- >> i'm in favor of an independent central bank apart from the political wins and the shifting win shifting winds. i don't know what party that put me in. you are guys arguing hard money. i don't know what that means. guys who are like, soft money. and so, they have a deal with bernanke. bernanke says to reid, i'll be easier, in the joushl today, editorial. i don't know what that means. what do we want? we should have a discussion about what the fed is supposed to do and how to insulate it from the mass hysteria. laugh track. >> the 20/20 hindsight, all these guys knew that this was a big abc dent waiting to happen, rick, credit, collarized mortgages no one was happening. when it's happening it might not have been as clear to guys as smart as greenspan and bernanke. >> i think the fed should have -- >> how smart was robert ruben?
does de know what was happening at citigroup? >> these guys were amazed at the financial developments taking place. they legitimately thought it was going to lead to a better world. they thought if you could offlay this risk you could get more people -- there was daik i think a benevolent idea behind it -- >> same with homeowner ship. >> that was a good thing. >> right. people make mistakes. >> and the guys on wall street made mistakes. now, how they should pay, does it mean we should ruin the central bank? i don't know. >> let me put a pitch in for my amendment. >> you're just in limbo, joe. >> all right. we're going to talk more with the congressman about that proposal in a moment. steve, you can stim stick around. let's take a look at the futures because they have been very strong this morning. we've been watching those futures at this point you can see actually losing a little steam but still up by about 56 points above fair value for those dow futures. let's get down to the futures pit in chicago for an
early look at what to expect. rick santelli and larry loven of secrets of traders.com standing by at cme. larry, let me start with you. you've been watch, futures, too, through the course of the morning. at one point we were talking about the futures up by 120 points above fair value. they've been coming back down. was the initial snan back just a snap back from last week's losses and why do you think they've been coming down through the course of the morning? >> i think most professionals expect them to come back so i think there's some people, as we got that big rally overnight, selling this market via electricity market, s&ps, dow, nasdaq, selling that market short. one of the biggest trades we've been doing down on the floor, probably for maybe 15 years of my trading career, three days in a row on the stock indexes, you buy on the fourth day if it turns lower. some people are looking for the market to turn lower and then finish higher. that's a trade we've been looking at a long time down here. some people are looking at that now. >> rick, you can hear, too? >> pardon? yes, i can hear. >> what do you think's been
happening, as we've watched this push and pull, what are the most important things people are talking about there? >> i continue to say the most important aspect really hasn't changed. it's jobs. as we see all of these issues handicapped another end of the world scenario, now it's not the bailout, it's whether the world in finance can exist without ben bernanke, we're losing focus. and i think this week in particular, supply will be important. the fed meeting is probably very much unimportant because with the question marks that are surrounding whether b.b. will lead the fed in the future probably makes him less apt to be a wild cowboy should any condition like that ever be possible to exist. >> we also get housing data and fourth quarter gdp. those will be pretty big numbers to watch, too, right? >> those are going to be huge. it underscores there's a disconnect between a certain reality and a certain hope of
how the future will look. back in july, mr. blinder wrote an editorial, i often refer to, talked about how you'll have a couple of good quarters of gdp. this quarter will be one of them. the real issue is extricating the inventory effect and extrapolate what kind of gdp you'll have three quarters from now. >> can i say something real quick? >> sure, larry. >> real quick, i want to say rick's exactly right. the focus is really lost around here. you want to see focus be lost around here on the trading floor or your viewers come wednesday when apple releases its tablet. that's really all anybody's going to be talking about for the next three days and the rest of that week. i really think everybody will almost forget ben bernanke's name for the next three days. i think rick is exactly right, lack of focus and you'll see more through the week. >> what happens as the fed pulls out and i think "the washington post" has a story today, what happens as the fed pulls out of the mortgage market? >> well, i think the answer to that's going to be pretty obvious. that we've done a lot of
subsidies that have distorted lots of markets. those distortions will ultimately disappear with subdysubd subsidie subsidies, if there will be a revisiting in any reconstitute ated form. think freddie and fannie dish. >> how did you like your fikt in the weekend paper, santelli. that was a good shot? >> i didn't notice any pictures in the week ent papers. >> did you see it? >> no. where was it. >> the whole massachusetts -- the whole situation up there. four guys on the top, and you were on the right. it was either new york times or weekend wall street journal, rick santelli, cnbc reporter, tea party moniker. i was proud. it's amazing. you're a cultural phenomenon at this point. it must feel weird. >> if i'm a lightning rod for people to get more actively involved in their tax dollars, for that i'm quite happy. >> rick, larry, thanks very much. we appreciate it.
>> all right, democratic senator jeff merkley talking to us earlier on "squawk box" about his decision to vote against ben bernanke's second term as chairman. joining us is senator judd gregg, member of the banking committee, ranking member of the budget committee, and our guest host paul kanjorski is still here. senator gregg nice to see you. did you see through the whole interview with the senator from oregon? >> i was driving through a beautiful snowstorm so i didn't see it. >> you could have hear it on sirius, but karma is so nasty -- >> i can't afford those experience -- >> yeah, i'm going to unplug it. his basic point was that bernanke was there for -- when cdss weren't regulated, when credit was -- when greenspan was at 1% for way too long, didn't do anything about consumer protection. he was there and sat idle by as risk was ramped up and nothing
was done. i think he said for the u.s. family. he said that about 10 or 15 times. how do you respond to that, bernanke was there for all the mistakes? >> i assume jeff and all the congress are going to resign because if you want to start laying blame around the table, congress should get a big size of that, big chunk of that blame, because it was congress which basically asserted policies which basically required fj institutions to go out and lend to people to buy homes, which they knew they couldn't afford and which they knew they couldn't pay off because the interest rates were so low and would readjust or because the people who were being given -- given the opportunity to get these mortgages simply didn't have the capacity to pay the mortgages and the houses were artificially highly appraised. this was all done through fannie mae and freddie mac being the seller -- or the buyer of these mortgages. and so, you know, there's a lot of blame that can go around. i think what we should also acknowledge f you're going to start blaming people, you should
also credit people for thinks they did right. now, we were on the verge of a cataclysmic event in late 19 -- 2008. and it didn't look good for us as a country. we were headed towards what was probably going to be a massive financial meltdown in all our institutions. and it would have had a huge impact on main street. yes, we've been through a very serious recession, but you're talking about something that could have been on a depression type of level. it didn't happen. why didn't it happen? it didn't happen because the chairman of the fed, along with the treasury secretaries, both paulson and geithner, stepped in. they pushed the envelope, if they didn't push the envelope, the disaster would have been cataclysmic for as an economy and main street in particular. the way i describe this. it's like you're drooifgs over a bridge and the bridge is about to collapse. there's no way it's not going to collapse except that a guy comes along and fixes it before you drive over it.
you keep going. you don't even know the bridge got fixed. that's what happened here. ben bernanke came in with the fed, put significant resources into the economy and basically into the financial structure, and stabilized the bridge so that the economy continued on. granted, we still had a recession, but i think you have to give him a lot of credit for doing a really good job during an extraordinarily difficult time. >> i know you've seen the metaphor, you know, you don't -- the arsonist puts out the fire, you don't give him a medal. that's -- that's -- all this 20/20 hindsight -- >> he's not the arsonist. >> that's what the -- that's what they're saying, judd. >> well, that's -- you know, that's pandering populism. let's face it. there's a lot of populism going on in this country today and i'm tired of it, myself, because what it's going to do is burn down some institutions that are critical for our economy to recover and create jobs. this outrageous and continued attack on big just because it's bad, saying big is bad, is, to me, you know -- you know, where
does that stop? do we start disassemblie inwalm because of the fact they don't have unions? do we disassemble mcdonald's because they sell food people makes them fat? how absurd is it -- >> yeah, is there a problem with that? yes, yes. >> how absurd is it in a market economy, which depends on capitalism for its vibrance to say that if you've got a vibrant, strong, large entity, it can't exist? >> i can't -- i can't answer that, but i know that the congressman probably -- you can answer that, can't you? >> we hope. judd, paul kanjorski. >> yes, congressman. >> let me take the opportunity to congratulate you on a statesman-like stand on bernanke. i was there in the late days in september and october, and if it hadn't been for bernanke, secretary paulson and the united states congress that made tough votes six weeks before an election, this country wouldn't be what it is today. but we've got a lot of work to do.
you did mention one of the things close to my heart, the kanjorski amendment. the kanjorski amendment, too big to fail, is trying to add another layer of protection before we get to the need to use the -- resolution authority or bankruptcy if we get to a crisis state. what we're attempting to do is inject in something very similar you have in the communications field, that we don't allow one communications entity to own all of the entities. we're not allowing a bank that is so interconnected that could bring down the entire system. but we hope we'll never have to use that power. further, you know, if you talk to even some of the major bankers of the world, they'll tell you, don't get into risky areas where you can't imagimana those areas. the regulator can nudge people on that way. anyway, because i have such appreciation for you, i want you to study if-t and maybe argue it
for a while to kins convince you we need that as a tool. >> all right. let me make two points here, paul, because you are a serious guy. i appreciate what you've done on your side of the house. you've made a serious effort to try to address the whole issue of systematic risk. but there's two issues here. first you've got the issue of proprietary the issue of proprietary trading. let's put that on another side issue, a legitimate debate obviously. but this issue of simply because you're large we should set up a structure which allows people to come in and maybe break you up even though you're healthy and well capitalized i think it's very bad policy because, you know, we are a country that has a large banking system. we have a diverse banking system. we have 8,000 banks or something like that. some small, some medium sized, some large. why do we need large banks that are healthy and well capitalized? because we're the largest economy in the world and we have to compete internationally and have the capacity when our people go overseas to sell something to have a bank there to stand beside. we don't want some bank from
france or some bank from switzerland taking their business. we want to be able to follow them overseas. that's one of the reasons why you need large institutions. there are other reasons, too, obviously, if they're healthy. >> i think we should debate that but i think it's a ledge mat tool on the continuum that we don't want to wait until we go into absolute crisis and have systemic risk. >> that's why i think the idea of having a risk board which is made up of all the major people. >> yes. >> and then you have a resolution authority, if you see a systemic risk. if there is an institution which has systemic risk as its capital has collapsed or it's made a huge series of bad investments then you have resolution authority and, clearly, the stock will be wiped out, bond yield wiped out and you should resolve the thing. if it's a healthy bank i don't want five or six people in washington deciding whether healthy institutions can continue to exist because i think you're going to end up with very market distorting events when you have that sort
of oversight. it's going to be hard to raise capital, number one, because they've got this group in washington that may affect their ability to function but, more importantly, you'll have this erhang which makes our system less competitive with the european system, with the singapore system, the chinese system. this world economy, we've got to be the best place to create capital in the world. that's what we have to have a financial system which generates, an atmosphere where we're the place where people want to come and create capital. you can't do that if you're undermining confidence in the large institutions which are healthy. >> thank you. >> thank you. >> for coming on this morning. appreciate it. see you later. >> always a pleasure. >> we have phil lebeau with breaking news from general motors. phil? >> reporter: the chairman of general motors and interim ceo is going to take the ceo post on a permanent basis. remember, general motors has said for a couple months they'd have mr. whitacre serve as interim ceo while they looked
for a permanent ceo. today the company will announce ed whitacre jr., will take the post on a permanent basis. the chairman and ceo of general motors will now be permanent ceo of gm, a business update for the entire automaker will be coming up later this morning and of course we'll have it first here on cnbc. guys, back to you. >> wow. all right, phil. great. we'll look forward to that. yeah. >> herb jackson was here last week and said this might happen. >> so that's -- all we know is he is going to provide a business update at 11:30, whitacre is but that's not part of what we're seeing. so nice work, phil. thanks. more "squawk box" ahead including stocks to watch and we'll get the final roll call from our guest. you know, no ao last week and we were down 500 points. rrrrrrrrrrr
new ceo and chairman of general motors. we'll have more on that. i was just in town for a few days, and i was wondering if i could say hi to the doctor. is he in? he's in copenhagen. oh, well, that's nice. but you can still see him! you just said he was in... copenhagen. come on! that's pretty far. doc, look who's in town. ellen! copenhagen? cool, right? vacation. but still seeing patients. oh. [ whispering ] workaholic. i heard that. she said it. i... [ female announcer ] the new office. see it. live it. share it.